The sales of Alpha Company in March were $92,000. The Balance sheet of Alpha Company (31 March) is given below.
| Current Assets: |
|
| Cash |
23,000 |
| Accounts receivable |
27,600 |
| Merchandise inventory |
93,200 |
| Unexpired insurance |
4,140 |
| Total Current Assets |
147,940 |
| Gross fixed assets |
85,100 |
| Accumulated depreciation |
-29,440 |
| Net Fixed assets |
55,660 |
| Total Assets |
203,600 |
| Current Liabilities |
|
| Accounts payable |
23,664 |
| Accrued wages and commissions payable |
5,835 |
| Loan |
0 |
| Total Current Liabilities |
29,499 |
| Owners equity |
174,101 |
| Total equity and liabilities |
203,600 |
|
|
¢The projected sales in April and May are $110,000 and $184,000 respectively.
¢Alpha sales are 70% cash and 30% credit, collected in the following month. It has no currently overdue accounts and anticipates none in the future.
¢The company will purchase a second hand truck on 1 May 2008: $8,000
¢Miscellaneous cash expenses: 5% of the current sales
¢Rent: $4,600/month
¢Insurance expense: paid once a year (beginning of January) = $5,520;
¢Depreciation expense: $1,150/month
¢Tax rate: 0%
¢Wages: $5650/month + 15% commission of sales/month
¢70% of the wages made in a specific month are paid in that month, the rests are paid in the following month)
¢The inventory policy of the company is to begin a month with a sufficient inventory to cover 80% of sales + $36,000 cushion
¢Cost of Goods Sold: 65% of sales
¢60% of the purchases made in a specific month are paid in that month, the rests are paid in the following month).
¢Alpha borrowed from one of its founder at 1.5% interest/month for the next 2 years. Alpha borrows from and repays the founder at the end of the month. The agreement with this founder stipulates a $30,000 minimum cash balance in the ventures checking account.
Construct Alphas cash budget, income statement, balance sheet and statement of cash flow for April.
